Blogs

The following is a compilation of recent news in the legal industry and legal marketing/business development profession. LMA does not fact-check this content and accepts no liability for content contained herein; original publishers are noted in each brief. LMA weclomes members and industry practitioners to share their news and commentary through this resource. To contribute to the LMA Intelligence Briefings, send your briefs, along with a link to the full article, to LMA Headquarters in care of Sara Giacalone.

And in other news:

6 Critical Strategies Used by Law Firm Pricing Directors
Law.com (09/27/12) Hackett, Susan
Pricing directors are playing an increasingly large role at law firms, forging into new territory while having to deal with attorneys who are used to doing things a different way. Here are a few strategies provided by pricing directors. Focus on helping lawyers understand that non-hourly pricing can be a competitive advantage. Encourage attorneys to think about value-based pricing, as it requires up-front analysis, and advance conversations with clients that focus both the client and the firm on defining value and setting expectations before work starts. It is important to remember that firms considering pricing strategies in today's economy may see different approaches and set different goals based on their brand, niche practices, and position in the national legal market. Firms offering a wide array of services may want to distinguish themselves from firms specializing in one practice area. Look at the current environment to determine what kind of non-hourly billing structures already exist and how they are working. A pricing director needs to analyze and model their profitability data so existing models can be compared to hourly billing proposals and returns. Require lawyers to propose pricing structures before talking to clients. This requires sufficient background thinking that lawyers can often preemptively correct a proposal's shortcomings before submission or engaging in client conversations that cannot be retracted. A successful pricing initiative requires mechanisms for making a firm's attorneys accountable for pricing decisions, and must reward lawyers for working with the firm's leadership to price work in a businesslike fashion and to analyze their own process for delivering service and the cost of that service.

A Law Firm Name With a Curious Ring
New York Times (10/03/12) Lattman, Peter
The announcement of the combination of Deutsche Telekom’s T-Mobile USA and MetroPCS listed 14 different advisers that now get credit in the coveted league tables for their involvement. The list of advisers was a slew of common names, with one stand out: Telecommunications Law Professionals, a boutique Washington law firm. Telecommunications Law Professionals was started in August 2011 by five lawyers who spun out from Paul Hastings, one of the country’s largest firms. The firm specializes in providing regulatory counsel to telecommunications companies, helping them navigate the Federal Communications Commission and the thicket of federal laws related to the worlds of voice, data and video services. According to the starting partners, the name tells exactly what the firm does, and differentiates the firm from its more typically-named counterparts. The rules of the bar in the District of Columbia allowed for such a generic name even though other state bar associations require that a law firm’s name include the surnames of partners. Telecommunications Law Professionals has kept a good relationship with Paul Hastings — both firms are in the same building and have worked closely together on deals. On the T-Mobile/MetroPCS combination, Telecommunications Law Professionals provided regulatory advice to MetroPCS, while Gibson Dunn served as deal counsel and Paul Hastings advised on antitrust issues.

Big Law Steps Into Uncertain Times
New York Times (09/24/12) Sorkin, Andrew Ross
As regulations change and the threat of litigation rises, the importance of lawyers has never been greater; but the legal industry has been confronting great pressures, as well. The collapse of Dewey & LeBoeuf exposed the potentially fatal flaws in the bigger-is-better mantra, and business is still not booming. Some big blue-chip firms have managed to navigate the industry’s challenges successfully by sticking to their traditional ways, but a more sweeping transformation may be on the horizon. One model of this transformation may be Axiom Law, a firm founded by Mark Harris, a former lawyer at the white-shoe firm Davis Polk & Wardwell. Harris is trying to change the law firm business model, building a 900-lawyer firm that has no partners. The goal is to undercut the prices of the bigger firms on large cases and projects that require tens of thousands of hours. “The legal industry is about to go through a transformational moment,” Mr. Harris says. The change is needed: clients are unhappy, feeling overbilled, and underserved; and lawyers are similarly miserable, feeling underpaid, and overworked. The problem, many lawyers say, is P.P.P., or profit per partner. It has become the ultimate metric for measuring success among law firms, and there are only a few ways to increase profit per partner. One way is for firms to charge their clients more for what they do; another is for them to do more work for their clients by working more hours or using more lawyers; a third is to acquire more clients; and the last option is for firms to reduce their overhead by paying less rent, restraining the compensation of their lawyer-employees and other personnel. None of those options appear to be in the client’s interest at all. The focus on profits per partner is one reason so many companies have increasingly tried to move legal work away from big firms and have hired internal lawyers.

Brand Ahoy!
PSMG Magazine (10/12) P. 28; Shepherd, Lisa Hart
Acritas estimates that an additional quarter of global organizations plan to boost their spend on legal advice outside the home country this year, and Acritas CEO Lisa Hart Shepherd notes that "as new markets open up and demand for products and services widens, organizations are seeking quick yet effective, low-risk solutions to the complexities of dealing with the different legislation that applies in each market." Shepherd cites Acritas research demonstrating that the value of a robust law firm brand comes to the fore in new markets. "The challenge for the international law firm is to ensure that it offers clients the ideal balance of standardization and customization in the service it provides," she writes. "Consistent service (achieved through adherence to strong brand values) is highly prized by clients; but so too is a tailored approach that reflects the needs, customs and requirements of the market in which they are operating." The value of a straightforward approach and candidness of the law firm's abilities will help firms earn far greater respect from clients, according to Acritas. To capitalize on the numerous opportunities presented by a strong brand, law firms can adopt several practices, Shepherd notes. From an internal standpoint, there should be agreement concerning the values, proposition, and positioning of the brand; action in the form of time, energy, and investment to guarantee that the brand values come alive and are put into operation across the firm; and agility so the brands can adjust to new market challenges and opportunities while still adhering to their basic principles. Externally, there should be an accurate reflection of a firm's capabilities by the brand values to ensure trustworthiness and belief in the brand by clients; benefits stemming from the degree to which the brand can fulfill and surpass client needs and the effective communication about the qualities that distinguish the firm from rivals; and the level of confidence the brand instills in the client to keep the perceived risk innate in appointing the firm to a minimum.

Bringing People Together
Financial Times (10/05/12) Skapinker, Michael
Though the financial crisis is still with us, this year’s entrants for Legal Innovator of the Year have concentrated more on getting the best out of their staff, marketing their wares, and looking after their clients. Dana Denis-Smith, chief executive and co-founder of Obelisk Legal Support, attracted the judges’ attention with her firm’s use of parent-lawyers who choose the hours they want to work. Darryl Cooke, founding partner of Gunnercooke, won plaudits for his drive to keep overheads down and charge clients fixed fees in different aspects of corporate law. Meanwhile, Tim Jones of Freshfields Bruckhaus Deringer won admiration for leading his firm’s advice to the London 2012 Olympic and Paralympic Games. In the end, though, the judges awarded the prize to Daniel Winterfeldt of CMS Cameron McKenna, who has established two path-setting organizations: the Forum for US Securities Lawyers in London, addressing the application of and compliance with US securities law, and the InterLaw Diversity Forum for LGBT Networks. Winterfeldt, an American from Ohio now living in Europe, and a former medical student, has represented international investment banks and corporate issuers in securities transactions. He is also the founder and co-chairman of the Forum for US Securities Lawyers in London, which represents US-qualified lawyers practicing in the London capital markets as well as other market participants.

Buying In: Partner Paydays (Part 3)
Above the Law (10/09/2012) Anonymous Partner
Above the Law's "Anonymous Partner" analyzes the findings of a new partner compensation survey from Major, Lindsey, & Africa, which found, among other things, that partners at firms with open compensation systems on average made $350,000 more per year than partners at closed compensation law firms. Partner sees this as further evidence of the utility of lateral migration from closed to open compensation firms. However, partners at closed shops can use these findings to argue for greater compensation, threatening to leave unless they receive a raise. The survey also found that, with the exception of New York City, compensation in northeastern cities was lagging behind that in states like Texas and California, which Partner chalks up to the more robust economies in those southwestern states. While the survey showed a more than $200,000 disparity between annual compensation for partners based on whether they were litigators or corporate lawyers, which was largely attributable to the outsized effect of compensation for corporate talent and the largest law firms. Other patterns were high average compensation for male partners compared to female partners, which Partner ascribed to the disparity in seniority between male in female partners and expects to see level off as more female partners make their way into senior positions. In summary, Partner sees the new numbers as further proof that top level compensation remains tied to the hard work, ambition, and "love of the game" necessary to continue moving up in the legal field.

Cleveland Law Firms on Hiring Push, Though Rough Job Market Remains
Cleveland Plain Dealer (OH) (10/09/12) Grant, Alison
Cleveland, Ohio, has seen an increase in hiring at law firms in the city, following a national trend that has led to some 6,000 new law office jobs compared to the same time last year. Firm Tucker Ellis added 16 lawyers to its office in the city this year, Thompson Hine added eight attorneys, Walter & Haverfield added seven partners and five associates, and the Cleveland office of Jones Day added 17 lawyers over the same time period. The growth, attributed mostly to market and regulatory changes, has not been even among all law offices in the city. Calfee, Halter & Griswold saw its number of lawyers decline from 143 to 136 over the past two years, while Benesch, Friedlander, Coplan & Aronoff saw a slight decline from 115 to 113 city lawyers over the same time period. Overall, legal experts expect rather stagnant growth in the sector for the near term, with the demand for new lawyers still below the nearly 40,000 supply of students that graduate from law schools per year. "Right now I'd characterize it as a very delicate balancing act of maintaining the productivity levels of existing partners and associates and some hesitation to add until the gain really has legs," said Michael Rynowecer, president of BTI Consulting Group in Boston. "By and large, we're still seeing caution as the byword."

Focus on Value Proposition
The Law Gazette (10/04/2012) Bramall, Sue
Law firm marketing is often seen as the department which does the brochures, the website, and runs events. As such, it is relatively rare that the marketing team is consulted in areas such as pricing, but all a firm’s effort and expenditure on promotion may amount to nothing if the solicitor receiving an inquiry fails to communicate the value in the service which he or she is proposing to provide. Mystery shopping reports reveal how successful these campaigns are, as analysts look at how clearly the costs were explained, whether the mystery client felt they understood the value in the service being offered, and the payment terms and options. Potential clients are often left confused, uncertain or unclear about the benefits or risks in proceeding. Earlier this year, the Legal Ombusdman in the UK published a useful guide for lawyers. It includes a range of complaints which have passed across their desks, illustrating how lack of clarity in how costs information is provided can lead to problems at a later stage. Pricing is an important part of the marketing mix, and as competition intensifies in the legal marketplace it is important to ensure that your value proposition, pricing strategy and price communications do not disappoint a firm. Letting the marketing team review costs proposals could identify some simple improvements in presentation which might clarify things for clients and reduce risks later on. Many firms are starting to come to grips with alternative fee arrangements such as fixed fees, but particular care is needed in communicating how risk is apportioned in these. American lawyers appear to be ahead of their UK counterparts in this effort. Few lawyers receive training in pricing strategies and negotiation, as do even fewer receptionists and junior assistants. However, they are often handling inquiries to quite an advanced stage.

Law Firms Mine San Francisco for Internet Start-Up Gold
New York Times (10/01/12) Rusli, Evelyn M.
Legal practice strategies are changing in San Francisco, with some law firms redesigning their surroundings and cultures to more closely match prospective start-up clients. For example, the offices of 25-year-old law firm Wilson Sonsini Goodrich & Rosati feature exposed lighting, long communal tables, and office decorations you might find in an Internet start up, like a fire-engine-red British telephone booth. "There's a marketing benefit," says Wilson Sonsini partner Yoichiro Taku. "It definitely makes us hipper." Such cultural changes are part of an effort among law firms to build credibility among new technology companies. Other strategies include offering free services, working with incubators, and writing blogs. While early-stage businesses represent only 20 percent of Wilson Sonsini's business, those companies can generate large fees as they mature. "Small deals would not have interested these firms a few years ago," says Stanford University law professor Joseph A. Grundfest. "Now, it’s the new normal." For large law firms, attracting young companies requires some balance. Firms want to reach the highest number of top-shelf start-ups, but have limited resources to do so. Many firms are working to reduce the cost of early-stage venture financing for entrepreneurs, and are automating the process to make it easier for lawyers.

Law Firms Wring Costs From Back-Office Tasks
Wall Street Journal (10/07/12) Smith, Jennifer
Large law firms dealing with pricey rents and high labor costs are increasingly looking for ways to save, and are starting to adopt strategies used by their corporate clients. Firms are moving billing, human resources, and other support functions to cheaper locations, outside of the nation's largest cities, ad some are increasingly using outside contractors for these tasks. Such changes used to be an exception, but legal experts say moving these services out of a firm's headquarters, or out of the firm altogether, have become more popular since the start of the recession. "Lawyers have had to focus now more than ever on the same cost constraints their clients have had to face for years," says Andrew Glincher, chief executive and managing partner at Nixon Peabody LLP, one of the first law firms to establish a centralized business-support center. About a dozen large law firms have established back-office operations in the U.S., Britain, India, and the Philippines since 1999. Many support centers can be staffed around the clock, which is a major benefit for global firms with offices in distant time zones, and speeds turnaround of legal documents. Law firms and their clients have become increasingly comfortable with hiring offshore companies to do some legal work, like reviewing documents during discovery.

Lawyers Get Rich Off Consumer Bureau
CNNMoney (10/01/12) Ellis, Blake
As the Consumer Financial Protection Bureau cracks down on banks, debt collectors, student lenders and other financial players, law firms are stepping up to protect them, and profiting nicely as a result. Ballard Spahr, a national law firm with more than 500 employees, began creating a team of lawyers dedicated to learning about the CFPB and its powers as soon as the bureau was signed into law. The now 20-person team is part of the firm's Consumer Financial Services division, and CFPB-related work has increased the division's revenue by about 50 percent this year since its creation. Loeb & Loeb, another law firm that launched a CFPB task force in July, has seen CFPB-related business pick up so much that its new unit is expected to account for 30 percent of the Consumer Protection Defense department's revenue within the next year. Law firms Venable LLP and Pepper Hamilton have also recently launched special task forces to take on the CFPB.

Wanted: Lateral Hires With Real-World Experience
Law.com (10/09/12) Stapleton, Jay
Some big law firms are boosting their hiring, and they are seeking people with professional experience who have been out of law school for a few years. As law firms look to fill specific staffing needs they are seeking candidates with strong internships, court clerkships, or business experience. One reason for the surge in hiring is the fact that many large firms reduced their staffing levels in 2009 and 2010 right after the start of the economic downturn. They now realize that to keep their clients happy, they need to fill some positions with experienced talent.